LONDON : Emerging markets corporate default rates this year are expected to hit 10 per cent for the first time since the financial crisis, analysts at U.S. investment bank JPMorgan forecast in a note on Thursday.
The bank raised its emerging markets corporate high yield default forecast to 10.7 per cent from 8.5 per cent for 2022, the second hike in a year, due to the"continued deterioration in the China property space" and more Russian companies affected by"sanctions and/or technical default" due to the war.
"Notably the main contributor is unsurprisingly the China property segment where the default rate is expected to reach close to 40 per cent this year," added JPMorgan's Alisa Meyers. Lockdowns in Chinese cities due to the COVID-19 pandemic delivered a big blow to property sector liquidity. There have been so far 24 defaults or distressed exchanges in China for $41 billion.